If a redemption fails to qualify for sale treatment, the full amount received by the shareholder for the stock
A)Qualifies for exchange treatment
B)Qualifies for exchange treatment after deducting the stock's basis
C)Qualifies as a property distribution after deducting the stock's basis, and thus is a dividend to the extent that it is out of E&P
D)Qualifies as a property distribution and thus is a dividend to the extent that it is out of E&P

Question

Quizplus · Accepted Answer

If a redemption does not qualify for sale treatment, it is treated as a property distribution. Therefore, the full amount received is considered a dividend to the extent it is paid out of the corporation's earnings and profits (E&P).

If a Redemption Fails to Qualify for Sale Treatment, the Full